Unit 2: Marketing

Processes and
Planning
MSc. Nguyen Thao
Duyen
LO2 Compare ways in which organisations use
elements of the marketing mix to achieve overall
business objectives.

LEARNING OUTCOME 2
Marketing
Mix:
Product
MSc. Nguyen Thao
Duyen
 Presentation’s
Outlines
• Product
1. What is a product
2. Product levels
3. Product mix, line and items
4. Product life cycle
5. New product development
process

MSc. Nguyen Thao 4

Duyen
 What is a
Product?
• A product is anything that can be
offered to a market for attention,
acquisition, use or consumption that
might satisfy a want or need
• Includes physical objects, services,
places, organizations, and ideas.

5
MSc. Nguyen Thao Duyen
 Product and Service
Decisions
Creating and managing products
involves a series of
specific decisions concerning factors such as
• performance,
• consistency,
• reliability,
• durability,
• compatibility,
• ease of use,
• technological design,
• degree of customization,
• form, style, [Link].
Nguyen Thao Duyen 6
 Product
Levels
• Core Product

• Tangible Products

• Augmented
Products

MSc. Nguyen Thao Duyen 7

 Product
Levels
• Core product: Company’s answer: What is the core
benefit the customer is seeking for? What the buyer
is really buying.

• Tangible product delivers the core benefit to the

customer.

• Augmented product is extra products/services

offered to add value to the core product and help
to differentiate it from the competition.

MSc. Nguyen Thao Duyen 8

 Product
Levels
Installation

Access
points
Quality
Augmented Brand
product name
Features
Delivery
Core benefit
& Price After sales
or service
credit
Styling
Tangibl
e Packaging
Product
Repairs
Warranty
Core
product
9
MSc. Nguyen Thao Duyen
 Product Mix, Line
and Item
• Product mix – total assortment of
products

• Product line – groups of products

• Product item – each product within a

line

MSc. Nguyen Thao 1

Duyen 0
Product Mix Width and Product Line
Length for Procter & Gamble Products
(including year of
introducti
on)

MSc. Nguyen Thao Duyen 1

1
The Product Life
Cycle

MSc. Nguyen Thao 15

Duyen
Summary of Product Life-Cycle
Characteristics, Objectives,
and Strategies

16
MSc. Nguyen Thao
Duyen
 New-Product Development
Process
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test marketing
8. Commercialization

MSc. Nguyen Thao 17

Duyen
 New-Product Development
Process
Idea Generation

New idea generation is the systematic

search for new product ideas

Sources of new-product ideas

• Internal
• External

MSc. Nguyen Thao 18

Duyen
 New-Product Development
Process
Idea Screening

Idea screening refers to reviewing new-

product ideas in order to drop poor
ones as soon as possible

MSc. Nguyen Thao 19

Duyen
 New-Product Development
Process
Concept development and testing

Product concept is a detailed version of

the idea stated in meaningful
consumer terms

Concept testing refers to new-product

concepts with groups of target
consumers
MSc. Nguyen Thao Duyen 20
 New-Product Development
Process
Marketing Strategy Development

• Part 1:
• Description of the target market
• Product positioning, sales, market share,
and profit goals
• Part 2:
• Price, distribution, and budget
• Part 3:
• Long-term sales, profit goals, and
marketing mix strategy

MSc. Nguyen 21
Thao Duyen
 New-Product Development
Process
Marketing Strategy Development (Cont’d)

Business analysis involves a review of the

sales, costs, and profit projections to find
out whether they satisfy the company’s
objectives

MSc. Nguyen Thao Duyen 22

 New-Product Development
Process
Marketing Strategy Development (Cont’d)

Product development involves the creation

and testing of one or more physical
versions by the R&D or engineering
departments
• Requires an increase in investment

MSc. Nguyen Thao 23

Duyen
 New-Product Development
Process
Marketing Strategy Development (Cont’d)

Test marketing: the product and marketing

program are introduced into a small
realistic marketing before full introduction

MSc. Nguyen 24
Thao Duyen
 New-Product Development
Process
Marketing Strategy Development (Cont’d)

Commercialization is the introduction of

the new product
• When to launch
• Where to launch
• Planned market rollout

MSc. Nguyen 25
Thao Duyen
Cost of Finding One Successful New
Product (Starting with 64 New
Ideas)

MSc. Nguyen 26
Thao Duyen
PRODUCTS CLASSIFICATION
MANAGING
BRANDS

MSc. Nguyen
Thao Duyen
 Introducti
Brands help on
differentiate the offering in two
main ways: by creating a unique brand identity
and by associating the brand with a meaning
that resonates with its potential buyers.

• Brand identity includes the identifying

characteristics of the brand, such as brand
name, logo, symbol, character, slogan, jingle,
product design, and packaging.

MSc. Nguyen 29
Thao Duyen
 Introduction
• Brand (Cont’d)
meaning reflects brand-
the
perceptions and beliefs held by the
related
buyers; it
reflects buyers’ understanding of the value
proposition associated with a particular
brand.
• First, it can signal the quality of the
products and services associated with the
brand.
• Second, brands can signal the price image
of the offering.
• Finally, brands can create additional
emotional (satisfaction from using the
brand), socialMSc. (group
Nguyen
Thao Duyen acceptance
30
 Branding as a Value-Creation
Process
Brands aim to create value that goes
beyond the functional benefits of the
offering. To achieve this goal, a manager
must consider five key factors: target
customers the company, its collaborators,
competitors, and the context in which the
company operates.

MSc. Nguyen 31
Thao Duyen
 Brand
An importantHierarchy
branding decision involves
determining whether different offerings in a
company’s product line should be positioned
as individual brands or should share the same
brand name. In this context, brand hierarchy
(or brand architecture) reflects the relationship
among different brands in a company’s
portfolio. There are two core approaches to
managing multiple brands:

• individual branding
• umbrella branding.
MSc. Nguyen 32
Thao Duyen
 Brand Hierarchy
• (Cont’d)
Individual branding involves creating a
separate brand for each product or product
line. To illustrate, Tide, Cheer, Bold, and Era
are individual brands of laundry detergents
created by Procter & Gamble.

• Umbrella branding involves using a single

brand for all of a company’s products. For
example, General Electric, Heinz, Virgin, and
Costco use a single brand for nearly all of
their products.
MSc. Nguyen 33
Thao Duyen
 Brand Hierarchy
(cont)
A key advantage of an individual-brand strategy
is that it enables a company to serve diverse
customer segments in diverse product
categories without diluting the image of its
brands.

A key advantage of umbrella branding is that it

leverages the equity of an existing brand,
benefiting from the instant recognition of the
core brand while avoiding the costs associated
with building a new brand.
MSc. Nguyen 34
Thao Duyen
Brand Hierarchy
Example

MSc. Nguyen 35
Thao Duyen
 Brand
Dynamics
There are two common types of brand
changes:

• Brand repositioning, which involves changes

to the identity and meaning of a company’s
brand

• Brand extensions, which involve broadening

the set of underying oflferings to which the
brand is applied.

MSc. Nguyen 36
Thao Duyen
 Brand
Brand Repositioning
repositioning involves changing an
essential aspect of the brand, most often to
increase its relevance to target customers.
Common reasons to reposition a brand
include:
(1)to respond to a change in target customers
(2)to reach a new target market
(3)to counteract a change in a competitor’s
branding strategy
(4)to respond to legal challenges: 1991
Kentucky Fried Chicken abbreviated its name
to KFC to avoid paying license fees to the
MSc. Nguyen 37
state of Kentucky. Thao Duyen
 Brand Extensions
Brand extension refers to the strategy of using
the same brand name in a different context,
such as a different product category or a
different price tier. For example, Starbucks,
extended its brand to include ice cream sold in
grocery stores.
The popularity of brand extensions stems from
the fact that building new brands is a costly
and time- consuming task. As a result, when
entering a new product category, companies
often choose to leverage the equity of their
existing brands rather than invest in creating
new ones. MSc. Nguyen
Thao Duyen
38
 Brand Extensions
• Vertical brand extensions stretch the
(Cont’d)
brand to a product or service in a
different price tier. Two types of vertical
brand extensions can be distinguished:

• upscale extensions in which the

brand is applied to an offering in a
higher price tier
• downscale extensions, in which the
brand is applied to an offering in a
lower price tier.
MSc. Nguyen 39
Thao Duyen
 Brand Extensions
• Examples of upscale brand
(cont) extensions
include Volkswagen’s attempt to enter the
luxury car market with the Volkswagen
Phaeton in 2004. Upscale brand extensions
are not very common and companies often
choose to launch a separate brand.

• Examples of downscale brand extensions

include the Mercedes A-series, Porsche’s
Boxster, and Armani Exchange. Because
they leverage the image of the core brand,
downscale extensions tend to be more
successful than upscale
MSc. Nguyen
Thao Duyen ones. 40
 Brand Extensions
• Horizontal brand extensions involve
(Cont’d) applying
the brand to a different product category,
typically within the same price tier. For
example, Timberland extended its brand
from boots to outerwear and travel gear, and
Porsche extended its brand from sport cars
to sedans and sport utility vehicles.

MSc. Nguyen 41
Thao Duyen
 Brand Equity and Brand
Power
Unlike brand equity, which reflects the value of
the brand to the company, brand power
reflects the value a brand creates in the minds
of customers in order to differentiate the
offering from the competition and create
customer value.

One of the benefits of brand power is the price

premium customers are willing to pay for the
branded product. An important dimension of
brand power is the customer loyalty.
MSc. Nguyen 42
Thao Duyen
Thank
you!